The Corporate Shell Game: Crimes that No One Is Guilty Of

Today's sermon is about a drug company called ISTA which makes a drug called Xibrom, which reduces pain and inflammation in the eyes after cataract surgery. ISTA, it seems just pleaded guilty in Federal court to a scheme to use kickbacks to get doctors to prescribe Xibrom off-label for other eye conditions.

As Phil Fairbanks writes in the Buffalo News:http://www.buffalonews.com/apps/pbcs.dll/article?AID=/20130524/CITYANDREGION/130529545/1005
--the evidence against the company was pretty overwhelming, explaining why they took the unusual step of actually pleading guilty in a criminal case. Prosecutors showed that docs were recruited ostensibly for speaking and consulting engagements to market the drug off-label, but in fact just as much to bribe them to prescribe the drug themselves. Company reps were directed not to leave written materials behind at the doc's office or to make records of their visits for fear of leaving evidence. (Eventually a couple of company employees blew the whistle.)

OK, so these guys broke the law, and ISTA had to pay a total fine of $33M (chickenfeed of course in big Pharma circles, and not such a big bite even for ISTA whose annual sales are $160M). So somebody must be guilty, right?

That's where Health Care Renewal jumps in. It seems that somewhere along the line, after the Federal investigation had begun but before final judgment, ISTA was bought out by the big eye product firm, Bausch & Lomb. B&L was shocked, shocked to find out what horrible things its new company had done in the past, but of course that was all in the past and there's no way that innocent B&L could be blamed for those old incidents, right? Now, despite the fact that B&L has no guilt, they are allowed as part of the ISTA sale to buy out Xibrom and rights to all future sales of the drug.

As part of the Federal case against ISTA and the guilty plea, ISTA suffered what is supposed to be the equivalent of capital punishment in the Pharma world--it's now banned from doing any business with Medicare or Medicaid. But the ISTA that's subject to this extreme penalty no longer exists. In capital punishment terms, it's sort of like digging up a corpse and sending it to be hanged. B&L does exist and it can sell Xibrom merrily as long as it wishes, but it's not guilty and so it can do as much business with Medicare and Medicaid as it wants.

So when corporations can play this now-you-see-it, now-you don't shell game, it's pretty obvious that any penalty visited by the Feds is pretty much a charade. The worst joke was said in the Buffalo federal courtroom, according to Fairbanks:

"[U.S. District Judge Richard J.] Arcara also wanted to know if the $33 million settlement was large enough to serve as a deterrent for a company that generated $160 million in sales in 2011.

“'This will have national consequences in the pharmaceutical industry,' [Assistant U.S. Attorney Mary Ellen] Kresse assured him."

Yeah, right. It's interesting, in today's wonderful world of corporate law, how corporations are people when it suits them to be--for example, when corporations are suddenly discovered to have first-amendment rights so that it's unconstitutional to limit their political donations. But if I commit a crime, and the investigation is ongoing to see whether or not I am guilty, I am not allowed to announce at the time I'm found guilty that I have morphed into a completely different person and so it's the old, no-longer existing dude that's guilty, and I should be allowed to go scot-free. Only corporations, it seems, are allowed to play that shell game.

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